Graham Duncan: Talent Is The Best Asset Class – The Tim Ferriss Show

Check out the Tim Ferriss Show Episode Page & Show Notes

Key Takeaways

  • On hiring:
    • Focus more on references
    • A great interview question – “If you were hiring somebody to do this job, what criteria would you use to hire them?”
  • Credibility = Proven Confidence + Relationships + Integrity
  • Spend more time thinking about tough problems – actually schedule thinking time
  • If you’re looking to improve in a certain area, hire a coach – it’s some of the best money you can spend
  • ALWAYS question your assumptions
    • A good thing to ask – “How might the opposite of this belief be true?”
  • Just like people are billionaires financially, if you have more than a billion seconds left in your life – you’re a time billionaire
    • (A million seconds is 11 days, a billion seconds is slightly over 31 years)
    • Just think – How much would a 90 year old billionaire pay to go back in time and be 20-years-old again?
  • During joyful experiences, try to pause and imagine yourself in the future asking- “How much would I pay to be in this moment again?”
    • Doing so, really helps you to appreciate life’s special moments

Books and Resources Mentioned

Intro

  • Graham Duncan (@GrahamDuncanNYC) is the co-founder of East Rock Capital, an investment firm that manages approximately $2 billion for a small number of families and their charitable foundations
    • Check out Graham’s blog
  • Josh Waitzkin, the chess prodigy who served as the basis for the book and movie Searching for Bobby Fischer, calls Graham “the tip of the spear in the realms of talent tracking and judgment of human potential in high stakes mental arenas”

What Graham Does Best – Talent Acquisition

  • Simply, Graham tries to find people who are “better at doing a thing than he is at doing that thing”
  • Graham’s mission in life today is to get as many people as possible into positive feedback loops
    • He says this is a good skill to have because it’s right next to one of his admitted weaknesses, “that I’m kind of lazy”
  • Graham doesn’t like micromanaging – he prefers people doing the things that they would do anyway
    • “If you construct organizations and teams in that way, you unlock a lot of stuff”
  • Today Graham acts as a general contractor for families to manage their wealth
    • In order to do that, his team meets over 1,000 contractors a year and tries to hire the best “investment craftsman” for any given sub strategy
    • A core genius of Graham’s is talent hunting – finding funky A+ potential mental performers in the finance space

Tension and Commercial vs. Transactional People

  • Graham says people are like musical instruments
    • “The range of notes they can play is dependent on the range of tensions that they’ve learned to hold”
      •  “I think there’s something really interesting about the tension between someone’s intensity and integrity – or aggression and humility”
  • Graham thinks of “commercial people” as those who create more value than they capture and “transactional people” as those who are trying to capture all the value
    • “People who are commercial, who balance that tension of aggression and integrity, or aggression and humility, tend to like doing business with each other”

On Hiring Employees

  • On using references – “People think of references as a thing you do after the fact, but to me it’s the whole thing”
    • “People generate trust, and it’s like this intangible asset that’s around them. And the trust sits in the heads of everybody they’ve interacted with over time”
  • The amount of decision space that a new employee gets is based on their credibility
    • Graham has a formula for credibility:
      • Credibility = Proven Confidence + Relationships + Integrity
    • When Graham tries to understand someone’s integrity, he looks to understand how they’ve behaved in prior moments of stress
      • The market’s crash in 2008 tested many relationships – so if a company has been around for a while, Graham likes to ask “What happened in ’08?”

High Signal Questions

  • What are some of the high signal questions Graham likes to ask?
    • “If you were hiring somebody to do this job, what criteria would you use to hire them?”
      • Why? – This captures their definition of success and some nuance you wouldn’t have known to ask about
      • This also improves your own criteria for the next interview
      • Tim can relate – he says that his friend Tobi Lutke , the CEO of Shopify, learned the business side of things by picking up new questions, new terminology, and new answers from each meeting with venture capitalists
        • Tim and Tobi talked more about this concept in these Podcast Notes 
  • What does Graham’s process look like for determining who to talk to as references?
    • Graham tries to find off-list references when he can, as he tends to find bizarrely high signal value there
      • “After 10 minutes on a reference – people run out of their script”
        • Graham was once called for a reference on somebody, but the person asking for that reference just wouldn’t let him give a positive endorsement without specifics 
        • At the beginning or end of chatting with a reference, Graham will say something like – “What I hear you saying is you’re kind of giving this guy a 7 on the promoter score…is that right?” or “On a scale of one to ten what’s your level of endorsement for this person?”
          • Graham says you tend to see patterns after reference #4 or so
    • Related advice was given to Tim:
      • Kyle Maynard, a quadruple amputee who climbed Kilimanjaro, learned from a very successful CEO to rank options on a scale of 1-10 without using a 7 when facing a decision
        • Tim has used this for many things when facing a decision– “It removes that safe, mild endorsement”
    • Another Point:
      • “In my opinion, in investment management there are no products, there are only humans, and that’s why I’m so focused on the people side of it”

Ambiguity and Spending More Time with Tough Problems

  • How does Graham think through cases with lots of positives, but a large number of weakness, or cases that at first glance aren’t extremely obvious?
    • “I think it’s a matter of holding those contradictory perspectives as long as you need to, to make sense of them”
    • Graham’s wife says he can be indecisive at times because he is so tolerant of holding the ambiguity
      • “One central strategy I have is to just spend more time with these situations”

Are there any other patterns that Graham has spotted in the talent that he’s selected that perform well?

  • “We’ve noticed that the people who do best tend to have lots of ideas”
  • Graham uses Bach as an example, as someone who had many more compositions than his peers – “There’s something around just sheer quantity of ideas and original thinking that characterizes them [geniuses]”
    • “When you start to achieve mastery, often people start creating their own language to capture the nuance that they’re seeing that makes them good at their thing”
    • Graham also looks for people who have the ability to kill their own ideas, and for people who might even be coming to replace him
      • On people who might replace him – These people just have a certain level of intensity and obsessiveness, and over time they’re just working so much harder

What is one of the best or most worthwhile investments Graham has ever made?

  • Graham has invested a disproportionate amount of income into paying for a collection of trainers and coaches
    • These coaches have allowed Graham to surface hidden assumptions
    • A good coach can notice what ideas you’re just assuming to be true or gripping on to perhaps too tightly
    • What are the next steps after identifying assumptions?
      • Tim uses a method outlined in The Work of Byron Katie
        • “Take the belief that is causing you discomfort and anxiety and go through the exercise of stating the opposite in a number of different ways”
        • Tim states that this helps to disentangle emotion and attachment from your initial statement
      • Look for disconfirming evidence if it exists
        • How does one train themselves to do this? – Develop an underlying paranoia and humility that you’re missing something

What books has Graham gifted the most?

What would Graham put on a billboard?

  • “It’s not how well you play the game it’s deciding what game you want to play”Kwame Appiah 
    • Zoom out:
      • Ask yourself – “Do I still want to climb this mountain or is that a local maximum and I should actually zoom out and head a completely different direction?”
    • This quote reminds Tim of David Foster Wallace’s famous commencement speech – This is Water 
      • Tim –  “I do the podcast in part because it helps me to see the water. It forces me to try to ask questions or articulate things that would otherwise just bounce around in my head, consciously or subconsciously.”
  • “We are not human beings having a spiritual experience, we are spiritual beings having a human experience. Welcome to the party”

How does Graham think about career advice?

  • “I like the image of a river with two banks. One side, is chaos and the other side is order/rigidity.”
    • The bank of chaos is schizophrenia and the bank of order is very ‘OCD like’ (obsessive compulsive disorder) – Graham says that healthy integration is basically swimming between the two banks
      • On careers – “You start off along the rigidity bank, apprenticing for somebody, and you’re learning the jargon of that industry and you’re trying to figure out how people define reality. But you’re in somebody else’s definition of reality, you’re refining reality, and you’re learning to be able to see.”
      • “Whereas the other bank, the chaos bank, is more like asserting reality” 
      • Graham says that starting your own thing too early can be a little disorienting
        • Tim recalls a quote by Pablo Picasso –  “Learn the rules as a pro, so you can break them like an artist”
    • To be a top 1% performer in a given field does one need to swim in the middle?
      • “You need a continual level of innovation and adaptability to stay ahead because the games that were working 5 years ago no longer work”

Time Billionaires

  • This is an interesting concept…
    • A million seconds is 11 days, a billion seconds is slightly over 31 years
      • Just like people are billionaires financially, if you have more than a billion seconds left in your life – you’re a time billionaire
      • If you’re only 20-years-old, you likely have 2 billion seconds left in your life
    • Just think – What would Rupert Murdoch (who’s worth $20 billion and is 87 years old) pay if he could go back and be 20-years-old?
    • Graham relates this to Tim Urban’s Life Calendar, which allows you to see a 90 year life in weeks
      • (Note from Podcast Notes – go check this out, its very eye opening as to how short life really is)
      • Tim recommends reading The Tail End, also by Tim Urban – it really opened his eyes as to how much time he had left to spend with his parents
        • Graham said reading this piece gave him new insight, and made him try to spend much more time with his parents, because as the post says –  by the time you’ve graduated high school you’ve spent 95% of the time with your parents that you ever will
    • Tim now imagines himself in the future, asking – “How much would I pay to be in this moment again?”

Wrapping Up

  • Graham also likes this quote by Mark Twain:
    • “There isn’t time so brief as life for bickerings, apologies, heartburnings, callings to account. There is only time for loving, and but an instant, so to speak for that.”

Random

  • Tim & Graham have “almost decapitated each other” while learning to paddleboard with Josh Waitzkin
  • Byron Katie walked into a restaurant once while Graham was listening to her book – A Mind Home with Itself
  • Y Combinator, when considering which founders to invest in, likes to ask what people do, or what they’ve built, in their spare time – this can act as an indicator that points to general behavior patterns

These notes were edited by RoRoPa Editing Services

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